Nairobi overshadows other counties in insurance premiums

The Kenyan capital, Nairobi has emerged as the largest contributor towards insurance premiums while other counties remain unexploited. Taking up slightly over 80% of total premiums last year from 72% in 2017, contributed to about 21% to national wealth. Data from the Insurance Regulatory Authority (IRA) shows that Nairobi handed insurers shs. 173.2 billion in premiums while the other 46 counties fetched a combined figure of only shs. 41.5 billion.

Mombasa, being the second largest city in the country, accounted for shs. 10.6 billion only in premiums last year followed by Kiambu, at shs. 4.82 billion. Nakuru came in fourth while Kisumu city, Nyeri and Uasin Gishu were all in the top seven even as they contributed merely 2% of the total premiums collected. This results in a drop in insurance penetration in the country to 2.43% of Gross Domestic Product (GDP), a 15 year low blamed on poor marketing, price undercutting and fraud amidst many other challenges that plague the sector.

Penetration has been dipping for the past five consecutive years despite the growth and expansion in the counties economies. Tom Gichuhi, Association of Kenya Insurers (AKI) chief executive alluded that penetration level isn’t keeping pace with GDP growth as supposed to be. Kenya National Bureau of Statistics (KNBS) data shows that the country’s most populated county contributes 21.7% of the country’s GDP, being a drop compared to previous years.

Counties associated with thriving economic activities such as agriculture, manufacturing, transportation and, financial, real estate, wholesale and retail took lead in the ranking by Gross County Product (GCP). While Nairobi still takes the lead in this, many other counties with a small share to GDP are growing at a faster rate, and signifying a potential catch up according to KNBS GCP report of 2019.

The KNBS report also shows that counties with strong presence of agricultural activities, specifically horticulture have consistently improved their share of GCP over the period since introduction of counties. For instance, at least 17 counties recorded a faster growth in their real GCP relative in all counties at 5.6% over the period 2014-2017.

In as much as agriculture being a key driver of growth in most devolved units, insurers have not been keen to take up insurance opportunities in this sector that accounts for about a third of the country’s GDP. This is evident as only 10 insurance companies in Kenya offer the cover for crops and livestock in a country whose economic growth is heavily reliant on agriculture.

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